Brave new world: the risks of embracing and not embracing new technologies in business

Although change is not without its challenges, business leaders cannot afford to bury their heads in the sand as technology advances at an exponential rate – to do so means certain doom.

This was the key takeaway message from Telstra’s recent Future of Business roundtable, which drew together leading futurist Ross Dawson as well past Telstra Business Award winners. The session was facilitated by Telstra Business’ Group Managing Director, Paul Tyler and Executive Director, Sales and Service Channels, Brendan Donohoe.

First to speak was Dawson, who described the increasing divergence, in terms of performance, between organisations that leverage new technologies – including innovations that unleash the full potential of their people or result in a more personalised customer service – and organisations that don’t. In support of this, he pointed to ABS data indicating that higher rates productivity and growth are strongly correlated with self-reported innovation and expenditure on technology.

Dawson stressed that innovation doesn’t necessarily have to be internally-driven for an organisation to excel: “One of the most important aspects of innovation today is this idea of open-innovation. You don’t have to come up with brilliant technologies internally, you can find what is relevant in the universe and bring that into your organisation –that’s also innovation. Any change – the making of the new – is innovation to my mind.”

Dawson said the fact that business technology is increasingly affordable, scalable and easy to implement (owing, partly, to the emergence of the ‘as a service’ model) means the playing field is not just being levelled, SMEs have a distinct advantage. He explained that SMEs, by virtue of their size, are able to adapt to change with greater agility than large corporations, noting “there’s no such thing as a nimble large corporation”.

Following on from Dawson’s insights, attendees heard from representatives of Cargo Crew (Vic), Abode Homes (NT) and Red Robot (ACT) about the business opportunities and challenges arising from new technologies.

Opportunities: ability to reach a global market

Narelle Craig, director, client services at Cargo Crew, said the ‘fashion-focused’ uniform company, founded by her sister Felicity Rodgers in 2002, evolved away from its roots as a ‘backyard business’ over time before launching an ecommerce store five years ago. This contributed to the company’s growth, with its workforce ballooning from four to 25 people. Today, online sales now account for 30% of the business with 15% of that coming from overseas. Craig explained, “Ecommerce has given us the ability to scale. We’re heading to 10,000 businesses wearing our uniforms this financial year. [More generally], technology has enabled us to collaborate with manufacturers, clients and partners. We’re able to work with different kind of people around the world. For instance, our content strategist is based in South Africa and we communicate via Skype”.

“We’ve set up close to 600 people across the world to run a photo booth business,” he said. “We’re having to manage that many people as a small, seven-person team. It’s been crucial to use technology to reach and support these people and otherwise run the business. We’re using cloud systems, including a smart inventory management system, to manage our jobs and [prevent problems such as] supply chain issues before they happen. They’re designed so we can be as effective here as they are in another state or across the other side of the earth.”

Challenges: data security, change management

Despite the efficiencies Red Robot has gained through technology, Preston admitted change management is an ongoing challenge, even for his small (albeit global) operation, with Ross acknowledging that companies are having to invest more in managing change brought by technology than the actual technology. Donohoe said Red Robot’s advantage, as a small business, is agility: “If you’re finding it challenging with seven staff, imagine if you had 70, 700, 7000 – it becomes a lot harder.”

Change management wasn’t the only challenge arising from technological advancements. The roundtable also touched on IT security, including the evolution of both cyber threats and security solutions, with Donohoe noting that while cloud has its risks, it also provides the answer in the form of cloud-based security solutions.

On the topic of security, Craig recounted the details of the sophisticated crypto-locker attack on Cargo Crew in February, describing it as the company’s ‘biggest challenge to date’. She said management believed the company’s IT security was sufficient until it was ‘locked out’ of its warehouse and financial systems, located on their local server. When the culprits demanded bitcoins to release systems, the company forked out AUD$1000 for the ransom, believing it was a small enough sum to risk losing. Unfortunately, the culprits didn’t relinquish control of the systems. According to Craig, it was if she and her colleagues had been “locked out of [their] house”.

“For basically a week, our whole business was crippled,” she explained. “We couldn’t dispatch any orders from our online store, we couldn’t raise any quotes and we had our whole team asking, ‘Wow, what are we going to do?’” We didn’t want to promote [the incident], even though our online store hadn’t been hacked… so we end up sending out an email saying ‘we’ve had some technical issues, thank you for your patience, we’re doing our best, and if there is anything urgent please contact us’. We went back to manual processes that we did prior to the implementation of our warehouse system. It blew my mind that we ever operated like that.”

Donohoe, who was in touch with Cargo Crew in the wake of the attack, arranged for Telstra’s security team to rescue the company’s backup data and got the business back up and running. The security team also implemented risk management strategies and tools to ensure the incident wasn’t repeated. Donohoe noted that the attackers hadn’t gained access to any sensitive material or data; rather, they had ‘inconvenienced’ the business by preventing them from operating. Still, it was an expensive inconvenience for the small business, costing it around $100,000.

Following on from Craig’s story, Justin Gill, director of Abode Homes (NT) revealed his company had experienced its own data ‘scare’ around seven years ago.

“We received a middle-of-the-night phone call from the police telling is our office was on fire,” he said. “Now, at that stage we’d just put in a $30,000 sever on site – it housed all our backups, everything. Our biggest concern was that all our data was lost. As it turned out, the fire was in the building next door to ours. Still, it was a big wakeup call for the. Now, we run everything on the cloud. We don’t run a server, we run thin clients throughout the business. The reasons are flexibility and security as well as peace of mind.”

Change is risky, so is not changing

Despite acknowledging the challenges around implementing new technologies and the fact that SMEs might be concerned they won’t get a return on their investment, Dawson was blunt: “not taking that risk means being left behind and not being competitive.”

Although technology has left organisations vulnerable to new competitors from adjacent and overseas markets, due to lower barriers to entry, he said there are also opportunities for organisations facing disruption to “become new competitors to someone else in another industry, geography, in another country”.

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